Canara Bank has received its entire outstanding dues from Rajesh Exports after the DRT ruled in the lender’s favour and the Karnataka High Court allowed the order to be implemented.
The account became an NPA in 2020, with Canara Bank pursuing parallel proceedings before the DRT, NCLT and under SARFAESI.
The market regulator has alleged possible financial misrepresentation and said 97-99% of reported revenue may have been inflated, while restraining Rajesh Mehta from dealing in the company’s securities.
Canara Bank Wins ₹510-Crore Battle: Rajesh Exports Forced To Pay After Years Of Legal Fight
Canara Bank has recovered ₹510 crore in full from debt-laden Rajesh Exports after a DRT order allowed the lender to enforce recovery proceedings following a years-long legal battle
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Canara Bank has recovered ₹510 crore in full from debt-laden Rajesh Exports after a Debt Recovery Tribunal (DRT) order directed the company to deposit the amount to prevent the sale of its properties, The Economic Times reported.
The bank had initiated recovery proceedings after Rajesh Exports allegedly blocked attempts to recover its dues through the insolvency process.
The account had turned non-performing in 2020, following which Canara Bank approached the DRT in 2021.
The lender also initiated proceedings before the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code and began parallel recovery action under the SARFAESI Act, according to a person familiar with the matter cited by ET.
DRT Order Helps Canara Recover Dues
The company subsequently obtained a stay from the Karnataka High Court on several recovery actions. However, the DRT proceedings continued.
The tribunal eventually ruled in Canara Bank’s favour after a prolonged legal battle. Following the order, the lender approached the Karnataka High Court seeking permission to implement the decision.
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The High Court subsequently allowed the DRT order to be executed and dismissed petitions filed by Rajesh Exports challenging its implementation. The ₹510 crore was then transferred to a Canara Bank account, the person told ET.
Canara Bank was the largest creditor of the Bengaluru-based gold and jewellery exporter.
Rajesh Exports Under SEBI Scanner
The recovery comes as Rajesh Exports faces regulatory scrutiny over its financial reporting.
In June, the Securities and Exchange Board of India (SEBI) alleged possible large-scale financial misrepresentation, non-cooperation with its investigation and potential inflation of the company’s reported revenues.
In a 109-page interim order dated June 3, SEBI said its investigation and forensic examination had found prima facie evidence suggesting that as much as 97-99% of Rajesh Exports’ reported revenue may have been inflated. The regulator described the findings as “egregious and unheard of”.
SEBI has also restrained Rajesh Mehta from buying, selling or otherwise dealing in securities of Rajesh Exports until further orders.
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Canara Bank Had First Charge Over Assets
Canara Bank had the first charge over around ₹400 crore worth of land and properties belonging to the company in and around Bengaluru.
The lender also had security over Rajesh Exports’ inventory and receivables, which were valued at around ₹4,000 crore in 2023.
The recovery of ₹510 crore marks a significant outcome for the lender after years of parallel proceedings under the DRT, NCLT and SARFAESI framework.